Tokenization of physical goods through DeFi Money Market

A recent Chainlink announcement revealed a collaboration with DeFi Money Market (DMM), which is expanding the offer of decentralized finances. Specifically, users can benefit from higher interest rates on tokenized physical assets by integrating with the Ethereum network.

The article published on Medium states that there will be an exponential growth in crypto assets in the coming years, as fiat currencies are increasingly converted to digital ones. Currently, the total capitalization of cryptocurrencies is approximately $ 250 billion, compared to the 90 trillion dollars held in bank accounts.

The vast majority of this money does not generate significant interest. In fact, given the lower interest rates and the fact that central banks continue to print money, the value of savings will decrease.

“There is a massive opportunity to capitalize on the decline in returns on traditional money markets by creating more efficient, decentralized money markets through blockchain technology.”

Defipulse, which reports a total value of deposits of $ 967 million, added that decentralized financial systems can become an alternative to banking systems:

“Banks should be careful, because the dream of integrating physical assets into DeFi becomes a reality. One such example is DMMDAO, which acts as a bridge between the crypto and fiat industries using chainlink oracles to provide self-financed loans with stable cryptocurrencies. ”

Tokenization of physical goods

DeFi markets will allow borrowers to secure cryptocurrency loans with tokenized physical assets. DMM aims to create the first blockchain-based money market to offer this service.

Specifically, the system will allow low risk investors the ability to borrow cryptocurrencies and earn passive interest income. Users can receive short-term loans in cryptocurrencies, using physical assets as collateral.

Currently, cryptocurrency loans can generate much higher interest rates than banks offer, for example, the Dai savings rate offers a 7.5% interest rate.

Chainlink announced on its official Twitter channel:

“We welcome DMMDAO in the Chainlink ecosystem! DMM is a blockchain-based money market, backed by real-world assets and reliable data provided by Chainlink Oracle. DMM has so far registered $ 10 million in loans secured by the tokenization of physical goods – cars. ”

1 / Banks better watch out because the dream of integrating real world assets into #DeFi is becoming a reality.

Take for example @DMMDAO which acts like a bridge between crypto and fiat using @chainlink oracles to offer car loans funded by stablecoins. https://t.co/Z6Sqi36XFj pic.twitter.com/yTOL63t79W

– DeFi Pulse ? (@defipulse) March 2, 2020

DMM offers the possibility to those interested to guarantee loans with vehicles, properties and other physical assets. The partnership with Chainlink offers a more secure system of valuation of these assets.

This is another step in the evolution of the DeFi market, which is one of the most vibrant aspects of this year’s crypto ecosystem.